Google CEO Eric Schmidt kicked off Web 2.0 Summit this year, and while he talked broadly about a range of issues Google is involved with (and that's a broad range), hosts John Battelle and Tim O'Reilly couldn't wait to tee Schmidt up to announce that Google is getting into Near Field Communications (NFC). Schmidt had an actual phone, with the brand well hidden. It will contain an NFC chip, and some special sauce in Gingerbread, the company's upcoming version of Android due in just a few weeks.

(You can watch Web 2.0 Summit live here.)

Using NFC in a phone, users can theoretically just "tap and pay" (O'Reilly called it "bump to buy") for example. This requires an ecosystem of merchants, payment providers and payment processors, and while this ecosystem is starting to form, it's still evolving. Schmidt later told a gathering of reporters that broader acceptance is probably a year away.

Beyond raw commerce transactions, NFC can also enable the mobility of other private information -- say for use by healthcare providers, or for making offers to mobile consumers and so on.

Schmidt said that this chip is already being used in thousands of places, including on many credit cards, and at merchants around the world. He later told reporters that the technology provides a higher level of authentication and identification than the magnetic stripe, which makes it very attractive to credit card companies for reducing fraud.

There was plenty of buzz about what the phone was (Motorola? Nexus S?). Schmidt's cheeky response to questions about whether Google would produce a new phone: "I said there would never be a Nexus 2."

Schmidt was more interested in talking about what applications could be written on top of NFC. On the one hand, he said he didn't have any ideas, noting that NFC in phones is still just beginning; but on the other hand when asked about Google writing its own native apps, he said: "We've been looking at it. Nothing to announce." So he does have some ideas.

He did not address what Google's direct business model will be here, but this is typical Google MO, at least as Schmidt likes to tell it -- come up with a cool idea out of engineering (in this case, a demo in a virtual world), develop it, see what happens. But he did say that although he thinks Android is a "more powerful, more scalable platform [than Google's competitors], Android won't succeed just if it's better." He said that Google has to broaden Android's acceptance, and that means getting the entire ecosystem to embrace it. Adding things like NFC helps do that.

He also said that Android's growing acceptance could help spur NFC: "We bring some volume" he said, in a bit of an understatement. (He also said that about a third of Android usage is happening "off the reservation" -- that is, not on tablets and phones.)

If Google is an information company, as Schmidt often says, then it benefits from more information flowing across the company's own ecosystem, enabling or furthering systems like, say, mobile ads or search. In fact, Schmidt talked about autonomous search, where your private information (used "with permission" he was careful to say) -- about location, about personal preferences -- is used to find things on your behalf.

Fritz Nelson is the editorial director for InformationWeek and the Executive Producer of TechWebTV. Fritz writes about startups and established companies alike, but likes to exploit multiple forms of media into his writing.

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